On Tuesday, European shares edged higher, boosted by banks. However, expectations of another large interest rate hike by the US Federal Reserve kept risk-taking bets in check.

STOXX 600 index added 0.1 per cent, after a soft start to the week, with banks ascending 1.6 per cent by 0759 GMT as creditors tend to benefit from a high-interest rate environment. On Wednesday, the US central bank will likely deliver its third straight super-sized 75 basis point (BP) interest rate hike, hardening its stance on persistent inflation.

Swedish stocks declined 0.5 per cent after the Riksbank increased interest rates by a full percentage point to 1.75 per cent in an unexpected move. Markets also watch the Bank of England’s policy decision. It is yet to be seen whether it will hike by 50 or 75 bps on Thursday..

Earlier this month, the European Central Bank had raised its lending rate by 75 bps, helping the banks outperform every other sector with gains of over 7 per cent so far in September. As per reports, German utilities RWE and Uniper got closer to striking a deal to purchase liquefied natural gas (LNG) from Qatar’s North Field Expansion project to help replace Russian gas. Shares of RWE surged 0.3 per cent, while Uniper fell 0.2 per cent. The utility index gained 0.1 per cent. On the other hand, shares of Bachem Holding rose 9.0 per cent to the top of the STOXX index after the Swiss biotech supplier inked two new contracts for peptides.